PZ Cussons Plc

Good afternoon all and welcome to today's PZ Cussons full year results call. My name is Adam and I'll be your operator for today. If you'd like to ask a question at the Q&A portion of today's call, please dial in and press star 1 on your telephone keypad. And I will now hand the floor to Jonathan Myers to begin.

Thank you Adam and good morning and thank you to all of you for calling in to our results presentation for PZ Cussons financial year ended 31st of May 2026. For those of you viewing the slides as we're presenting this morning, you can see straight away an example of how we built stronger brands last year. Here's us making a splash on Marble Arch about original sources tie up with High Rocks. The London leg of this global indoor fitness competition was a perfect opportunity to promote our latest innovation, the men's workout recovery range. Not only were we able to distribute tens of thousands of product samples at the event, we were also able to generate more than 16 million views online. Turning to the agenda for this morning then, I'll start with a brief introduction before handing over to Jan. Some of you will have met Jan already since she joined four months ago, and she'll share some reflections from her fresh eyes before getting into an update on our financial performance. I'll then provide a broader update on strategic progress before a chance for you to ask any questions. So without further ado, let's get started. And there's no better place to start than a reminder of the investment case we set out at our capital markets event back in February. We have winning portfolios of locally loved brands. They play in our three core categories and our four lead markets. These brands are supported by two other attributes which we also see as a source of competitive advantage. Our go-to market capabilities, and our manufacturing scale and agility. Our portfolio is well balanced, with each lead market playing its own role in delivering for the group overall. As Jan will cover, our balance sheet has been significantly strengthened and we have set out a clear capital allocation policy. Overall, this gives us confidence in our growth ambition and target of double digit total shareholder return through the cycle. Put all of this together, along with the actions taken following our strategic review, and we are now a more focused and more resilient business. So what of FY26 then, as we look through the lenses of this investment case and our refreshed strategy? Well, overall, we've seen some early signs of delivery. Performance was broad-based, with growth across all four lead markets and our top 10 brands. Our ability to step up investment in brand building activity to the highest level in recent years is paying off, supporting growth across the portfolio and enabling us to invest in the development of future innovation and activation plans as we build multi-year growth plans. We have seen a continued reduction in FX risk in Nigeria as our actions have materially reduced sensitivity to future currency fluctuations along with the ongoing implementation of guardrails that we set out in February and we have a significantly strengthened balance sheet not least thanks to growth of 12 million pounds in free cash flow as a result the board is proposing the resumption of dividend growth the first increase in four years like all companies in our sector we are of course mindful of the macroeconomic environment in which we're operating However, we have started the year in line with our expectations and are pleased to confirm that the outlook for FY27 is in line with market expectations. We remain confident that we are well placed to continue delivering sustainable growth over the long term. Now with that, I'll hand over to Jan.

Thanks, Jonathan. Good morning, everyone. It's great to be here presenting my first set of results at PSED Cussons. and I look forward to seeing some of you in person in the Roadshow over the coming weeks. For those I haven't met yet, I joined PZ in late March from Severfield, where I was the interim Chief Finance Officer. Before that, I was the CFO at Manchester Airport Group for more than five years. During this period, I oversaw the delivery of major investments and transformation projects, such as Manchester's $1.3 billion investment in Terminal 2, as well as operational efficiencies, technology advancements and finance transformation. I also led the refinancing and operational response as we navigated through the COVID pandemic as passengers fell from 60 million down to zero and then back up to 60 million. Prior to that, I held a number of senior commercial finance roles in global businesses across Europe and the U.S. having started my career qualifying with PWC where I worked in corporate finance in M&A lead advisory. Before we get into the numbers, I thought it would be helpful to share some observations from my first few months in the role. Firstly, PZ Cussons is a brilliant company with a fantastic portfolio of locally loved brands, a number of which have long featured in my own household. I've loved meeting so many colleagues in my first few months and it's clear that the business is full of brilliant people who are committed to the success of PZ and work hard every day to make it a reality. My first trip to Nigeria with Jonathan was in June and it was brilliant to get under the skin of how the business and the market there works. Understanding the recent financial history of the business and how this was impacted by the devaluation has been top of my list since joining. I'm pleased to say that the guardrails that Jonathan and the team have been embedding have greatly reduced potential risk in the future. As I've learned about the business, I see three areas where I want to focus and I feel I can make a difference. Firstly, in supporting the business, As we increasingly focus not only on investing in current year brands, campaigns and innovation, but also planning out over several years. This is largely about shifts in mindset and some of the principles of the longer term planning at the infrastructure companies I've worked at. Secondly, and related, is improving returns. We have been clear with our shareholders what to expect in terms of the financial algorithm. To really drive this, I now want each and every one of our teams to understand the role they play in delivering on our commitments and what it means as they think about investment and required returns. Whether that's money spent on TV commercial, a new line in a factory, or an IT systems upgrade. We also need an eye on how that criteria needs to vary depending on the developed or the emerging markets given the underlying differences in risk characteristics. Third, there are further opportunities for finance simplification. I'm a big user of AI myself and I want the finance team to be embedding these tools into our everyday work in order to free up time to support with value added decision making. Now let's move on to the numbers where we've had a strong year financially. Starting with the summary financials. Group revenue increased by 5.4% to $541 million with like-for-like revenue growth of 5.8%. That growth was broad-based with growth across each of our four lead markets and across our top 10 brands in their respective largest markets. Adjusted operating profit increased to 59.5 million, with the margin improving to 11%. On the more relevant comparison basis, which excludes the contribution from the PZ Wilmer joint venture in both years, adjusted operating profit increased by 24.5% and margin improved by 170 basis points. Moving further down the P&L, Net finance expense reduced significantly, reflecting the strengthening of the balance sheet. Adjusted profit before tax increased to just over 50 million, while adjusted earnings per share decreased to 7.14 pence. This decrease is driven by two factors. Firstly, a high effective tax rate which as explained at the half year is due to the post-tax income from PZ Wilmer joint venture no longer being recorded in our operating profit. And secondly, the mix of growth. With Africa's strong performance driving a proportionally higher minority interest charge and in particular as we saw strong growth in electricals in which we have a lower net ownership than elsewhere. Critically, free cash flow improved strongly to 54.7 million compared with 42.3 million last year, reflecting higher adjusted operating profit and lower cash exceptionals, partly offset by working capital outflow. Net debt reduced significantly from 112 million to 25 million, driven by the improved free cash flow. proceeds from the sale of our 50% stake in PZ Wilma and the disposal of surplus non-operating assets. As a result of the performance in FY26 and our confidence in the future, the board has proposed a dividend increase of 2.8% consistent with our progressive dividend policy. Turning now to revenue. The revenue bridge shows growth across each of the three reporting regions, each of the four lead markets, and in both the developed and the emerging parts of the portfolio. The single largest contribution has again been from growth in Nigeria. Pleasingly, although this was largely inflation driven, we have seen a much more stable economic environment in Nigeria. In fact, the movement in the Naira has been favorable with the red down bar for FX driven by the strengthening of sterling against other currencies. So turning to operating profit and with the 24.5% growth, I'm pleased with the quality of this delivery. We saw growth in both gross profit and reduction in overheads, thanks in part to 8.5 million structural cost savings, allowing us to increase marketing investment by 3.5 million. The 59.5 million operating profit we reported includes 5.4 million of FX gains as the revaluation of US dollar denominated liabilities in Nigeria reduced thanks to the appreciation of the Naira. This is a one-off gain in FY26 and so I would encourage you to think of our normalized operating profit from which we will grow in FY27 as being closer to 54 million. This slide links the FY26 performance back to the financial framework we set out at the capital markets event. Over the cycle, we are targeting mid single digit like for like revenue growth with increased marketing investment funded by gross margin expansion and overhead growth limited to be below that of revenue. I'm pleased to say that in FY26 we delivered against this framework. The result is improved quality of earnings, revenue growth supported by investment, productivity gains funding that investment, and a stronger, more resilient profit base. Looking now at the segments, starting with Europe and Americas. Revenue increased to 200 million, with like for like revenue growth of 0.9%. In the UK, our lead market Revenue grew 0.5% to $175 million. We delivered growth across the key washing and bathing brands Carex, Imperial Leather, Original Source and Sanctuary Spa, with Sanctuary Spa the biggest contributor driven by strong Christmas gifting. Outside the UK, revenue grew 3.8%. Most notably, and Sandra Paye returned to growth in North America, growing 6.9%, supported by the new operating model and partnership with Emerson. This was offset by some softness in continental Europe. Operating profit was broadly flat, as improved growth margins and good cost containment offset increases in marketing investment. Turning to APAC. Revenue was 173 million, up 3.9% on a like-for-like basis, but flat on a reported basis, reflecting movements in the Indonesian rupiah and Australian dollar. In ANZ, revenue grew 4% to 91 million, with growth across Morning Fresh, Radiant, and Rafferty's Garden. Morning Fresh benefited from strong performance in Autodish, Raff Teacups Garden grew strongly with early success from its relaunch into New Zealand and the one litre original source launch provided significant uplift to revenue. Indonesia grew 10.2% to $61 million, driven by Cousins Baby, with improvements in both price mix and volume. The growth was driven by the completion of the phased restaging of the overall brand. and e-commerce remained a major growth driver with strong growth across TikTok Shop and Shopee. The reduction in adjusted operating profit reflected increased marketing investment behind Autodish and the Cousins Baby restaging together with the depreciation of the Australian dollar and Indonesian rupiah. Moving to Africa. Revenue increased to $168 million, with like-for-like revenue growth of 14.7%. Revenue in our Nigerian lead market grew 22% to $133 million, with growth in both price mix and volume. We delivered double-digit growth across the majority of our largest brands, with Stellar particularly strong, supported by increased exports, and work to extend the purchase period beyond the seasonal peak of the harmattan dry season. Route to market improvements also continue to support performance as we again grew both the quantity and the quality of stores served. Our electricals business grew revenue by over 20%. Thank you for joining us. including support for the Carex launch. Turning now to cash flow and net debt. Net debt reduced by 87 million to 25 million. The big drivers here being the increase in free cash flow and disposal proceeds. Free cash flow was 54.7 million, up 12 million. supported by higher operating profit and less cash exceptionals. The Wilma disposal proceeds were 47.8 million with a further 27.6 million associated with surplus asset sales. You'll remember that in calculating leverage we exclude the benefit of the cash held within Nigeria of 24.5 million. So this results in the adjusted net debt to EBITDA of 0.7 times So below the one to one and a half times range set out as part of the capital allocation policy. Taking a step back, the balance sheet has been transformed over recent years with gross debt 174 million lower than three years ago. Related to the reduction in group debt is how our exposure to movements in the Naira has materially reduced. A major source of the impact on operating profit has been the intercompany liabilities within Nigeria's entity-denominated currency other than the Naira. As the Naira devalued, these liabilities increased in value, reducing our operating profit. The reduction in these liabilities has left us in a much stronger position. Historically, 100 Naira move would have driven more than £7 million impact on operating profit. Today that sensitivity on underlying operating profit is around 1.5 million pounds and we continue to work to decrease these liabilities and therefore the P&L sensitivity even further. Our capital allocation framework as set out at the capital markets event is clear. First we are targeting adjusted net debt that is excluding cash held in Nigeria to the adjusted EBITDA in the range of one to one and a half times. Second, we have adopted a progressive dividend policy. Third, we will consider bolt-on M&A and Jonathan will talk shortly about how Child's Farm represents something of a blueprint for what we're looking at. And fourth, cash returns to shareholders will be considered relative to those M&A opportunities. Given year-end adjusted net debt to EBITDA of 0.7 times, we now have substantial flexibility within that framework. So the key message is not that leverage has reduced. It is that stronger cash generation, portfolio simplification, and disciplined capital allocation have put the group in a much better position to invest behind growth, Support a progressive dividend and evaluate additional shareholder returns or M&A where it creates value. Finally, turning to current trading and FY27 guidance. As we said in the release this morning, the year has started in line with expectations. Like everyone else in the sector, we are mindful of the impact of the conflict in the Middle East. While there is still a number of unknowns, we have since the start of the crisis acted swiftly to understand and react to the impact, and believe that the large majority of the cost inflation can be offset by mitigating actions already in place. As a result, we are comfortable confirming current market expectations for operating profit, which range from 58 to 61.2 million, The H1-H2 split is expected to be more balanced than it was in FY26, where operating profit was skewed more towards H1, given the majority of the FX gains fell in the first half of the year and the majority of the marketing spend came in the second half. Based on spot rates, we don't currently foresee a material FX impact year-on-year, and we'd expect net debt to be lower again, reflecting continued strong underlying cash generation. Overall, we enter FY27 with good underlying momentum, a stronger balance sheet, reduced exposure to the Nigerian FX volatility and a better funded innovation pipeline. While there are external uncertainties to manage, the business is in a stronger position to continue delivering against the strategy and financial framework we have set out. And with that, I will hand back to Jonathan.

Thanks, Jan. Let me now come on to provide a broader update on progress and performance. Our strategy is focused and disciplined, centered around three core categories, personal, home, and baby care, in four lead markets, the UK, Australia, New Zealand, Nigeria, and Indonesia. We have a balanced geographic footprint with around 60% of revenue from developed markets and 40% from emerging markets. In our lead markets, our competitive advantage comes from our locally loved brands, our go to market capabilities, and manufacturing scale and agility. Our strategy is built on these competitive advantages, which actually we sum up in just 10 words as five priorities. Build brands, serve consumers, reduce complexity, develop people, and grow sustainably. Finally, as Jan has discussed, We're clear on how we will allocate capital to maximise shareholder returns. So a clear framework of sharper portfolio choices, stronger execution and disciplined use of cash to drive sustainable long term value. Now let's take a look at progress we have made against these five priorities, starting with some examples of how we are building brands and serving consumers. Gifting in the UK has been a clear success. where we've been learning and optimizing our plans each year. Clegg Sanctuary Spa Gifting where revenue is up more than 70% over the past two years. This has been achieved through improved product offering, optimizing the pricing architecture of the range including playing at higher price points and through bigger, better in-store displays and activation. We broadened retailer participation in the program last Christmas adding seven new customers and push for stronger execution in those retailers already involved. Take Boots, for example. They sold a PZ gift set every 15 seconds in the run-up to Christmas last year. And it may surprise some of you as you listen to this with your mind secretly wandering off to the sun loungers you're hoping to secure around the pool in the next couple of weeks. We've actually already started making deliveries of our 2026 Christmas gift sets to retailers' warehouses and we're well on track to delivering our first million units of the season. Watch this space for more to come as we expand our offering to more brands at more price points and at other gifting occasions through the year. And I hope I've given you all some inspiration for your own last-minute shopping when it comes to Christmas 2026. Moving from one season to another, let's move to our other highly seasonal business, Saint-Tropez. In June last year, we announced the decision to retain the brand and embark on a new strategic direction. It's reassuring, therefore, to be able to report that after two years of double-digit decline on Santa Fe in North America, our partnership with Emerson Group is already bearing fruit with a return to growth of 7% in FY26. Emerson's scale and expertise in the US stretches across customer management, logistics, and brand activation. When it's coupled with our dedicated, multifunctional, Sandra Pay team of experts in the category, we have confidence that better brand building and stronger execution will unlock the potential we saw in the brand when we made the call to retain it. Take Amazon, for example, which was the first channel Emerson turned their attention to as part of the phase transition of the business from our own operation last year. It was already a growing channel for us, but Emerson brought their experience to bear. Starting with getting the basics right, improving and optimizing product pages, increasing media efficiency, and aligning promotional activity to Amazon events. As a result, our growth rate more than doubled, and Amazon is now Saint-Tropez's number one customer in the US, not unlike many other premium beauty brands. However, there is no room for complacency. We have more to do in North America and elsewhere. We did not grow in the UK and have been working hard to improve performance here, especially in the run-up to the peak season. Though not yet reflected in the reported revenue numbers, we have seen sequential improvement in retail sales in the UK as we came into the summer 2026 season, accelerating to reach double-digit growth in the peak season and a return to market share growth. Looking to next year and beyond, we have stronger and bigger innovation for summer 2027. In fact, four times the number of new products, including one patent-pending potential blockbuster launch. We'll also have innovation targeted at younger consumers, as we seek to rejuvenate the brand and revitalize what it stands for. This includes where consumers see and interact with the brand. Hence, the UK launch on TikTok Shop just last month. It's clearly early days and we're in the phase of testing out what works and what doesn't, but this is an example of how we are pushing the brand into new channels to reach new consumers. With our ANZ business returning to full-year revenue growth, it's important to call out the role innovation played alongside expansion beyond the grocery channel and a renewed focus on New Zealand. We're making steady, sustained progress with our entry into the auto dish category, taking 160 basis points of share growth in the year, peaking at a 10% share when on promotion where it stopped. As you may know, we're up against some formidable and well-established competition here, but we continue to see significant opportunity given the strength of the Morning Fresh brand in the washing up liquid market, not least fueled by disruptive packaging innovation in that category too. We've also seen a step change in the success of Original Source, getting the basics right to win in Australia, which is a market dominated by larger packs, often with a pump. Hence, the launch of our new one-litre pump pack has hit the ground running, rather than our previous over-reliance on the UK-preferred 250ml pack size, often dismissed as a travel size or one for the gym bag by the average Aussie shopper. In Indonesia, we completed the phased restage of our leading Cussons baby brand, Thank you for joining us today. We are now live streaming from our own studios across TikTok shop and other social media shopping platforms to reach our busy consumers wherever they are, at work, at home, or stuck in typical Jakarta commuter traffic. Moving to Nigeria now. We've obviously talked at length about the opportunities we see for our business there and our strategy to unlock them. As a Gale set out for the Capital Markets event in February, we have three main priorities. It starts with growing our core. We're doing this by driving distribution and building stronger brands. Take Morning Fresh, the number one washing up liquid in Nigeria. The Care We Share campaign has challenged household norms with the question, who should wash the dishes? Positioning the brand as an advocate for shared responsibility in the modern Nigerian home and reinforcing the brand's benefit that cleaning the dishes is easier and faster with a product that really performs. Our own campaign was amplified by social media influencers, turning a simple question about household chores into a national conversation, reaching nearly 50 million people and helping elevate the brand beyond just the functional benefits on offer. We're also expanding the categories in which we play. The launch of Carex, increasingly a trusted authority in family hygiene, saw us deliver incremental revenue and win Brand of the Year in the Nigerian Marketing Awards. Finally, we continue to make progress, delivering growth through exporting to new countries. In FY26, we accelerated growth to West and Central African markets, contributing to growth in our Nigerian revenue and in hard currency too. Jan talked about the opportunity for bolt-on M&A in the context of our capital allocation policy. And we see Child's Farm as a potential blueprint for this type of M&A, taking a growing founder-led brand on the next leg of its journey. Since our acquisition in 2022, we have created value through leveraging our competitive advantages. We've used innovation and a restage of the brand to strengthen its equity. We've leveraged our go-to-market capabilities to drive distribution and form exciting partnerships. And then we've insourced production where it makes sense and otherwise maintained effective arrangements with our third-party manufacturing partners. Alongside the competitive advantage that we can bring, we can also add scale advantage. In fact, the combined savings from organizational and manufacturing integration completed last year are in excess of £4 million. It's also exciting to let you know today that, thanks to strong collaboration with the Emerson Group in the US, we have recently launched Child's Farm into Walmart. We secured online distribution earlier in the year. and have now opened up in-store distribution over the past few weeks. In fact, such is the support from Walmart in their latest range review. Child's Farm is now on the shelves of every single one of Walmart's 4,600 stores in the US. While it's still very early days and we are quite sanguine that the US will be a challenging market to crack, our partnership with Emerson gives us a strong platform for growth on a brand that we have already proven in the UK. Early signs from US shoppers and the Walmart buying team are positive. So we recognize the hard work has only just begun. Stepping back then, how have we done with the overall acquisition? Well, the brand is now firmly profitable as well as growing and is on track for a post-return on capital employed in excess of our weighted average cost of capital in FY27. This, combined with the opportunity in the US reassured us that we made the right call to add Child's Farm to the PZ portfolio back in 2022. Meanwhile, we've also continued to reduce complexity across the business. Firstly, through portfolio simplification. Most significant was the £50 million plus disposal of our stake in the non-core PZ Wilmar business. But we also exceeded the £20 to £25 million guidance we communicated for other non-core surplus asset sales achieving more than 27 million pounds from disposals in Asia and Africa. Secondly, through operational simplification, consolidating UK and European operating models into one set of systems and processes, building a central data warehouse to enhance reporting and analytics capabilities, as well as the consolidation and integration of 33 brand websites, improving the shop window for our brands to consumers around the world, as well as stepping up our cybersecurity measures. In summary, good progress made, but we are not yet done making our business simpler and more focused. We've also made good progress strengthening the organization as we continue to invest in attracting and retaining the best people across the business to drive performance. In FY26, our global engagement survey secured a 97% participation rate, itself an indication of an engaged organization. Overall, the survey generated an 83% global engagement score, well ahead of all industry and specific consumer sector benchmarks. To consolidate on this strong foundation, we've launched a renewed employee value proposition, Dare Discover Do, as we strive to attract great talent and create a stronger performance culture in the business. And of course, sustainability remains critical as we grow our brand. whether that's for our employees, our consumers or other stakeholders. We're making tangible progress on reducing our carbon footprint with a 73% reduction in scope one and two emissions versus 2021 and securing an A- in the well-established and industry-recognized carbon disclosure project scoring system in 2025. We are also reducing plastic intensity, for example, through bigger pack formats, continuing to prove the consumer experience and Value on offer. And we know some challenges require more coordinated, broader intervention. So we're working through cross-industry collaborations to help transform the infrastructure around us. We were proud to join forces with our industry peers as a founding signatory for the UK Packaging Pact, an initiative to transform packaging and promote circularity, reuse and sustainability. For us, sustainability is central to our growth and remains critical to our long-term success. So now, let me sum up. Our renewed strategy is starting to translate into delivery. We have so much more to do, but we take reassurance from the early signs of progress. FY26 was a strong year in terms of performance, with growth across all lead markets and our top 10 brands. Increased brand investment supported our growth in FY26, and Planted Seeds for sustained growth in future years. In Nigeria, we have navigated significant external challenges and are now implementing effective guardrails to reduce FX risk and sensitivity, leading us to focus on driving well-established brands in a market with significant opportunity. Our balance sheet is in good shape, allowing us to invest in the business, renew dividend growth and give us the option for bolt-on M&A in the future. and we have started FY27 in line with our expectations, despite the obvious macroeconomic uncertainties that we are all well aware of. So as I pause for a moment to assess the bigger picture, reassured by our renewed momentum and informed by our refreshed strategy, I am confident that PZ Cussons is well placed to deliver sustainable growth over the coming years. With that, we'd be delighted to take your questions. So I'll pass over to Adam.

Thank you. As a reminder, if you'd like to ask a question on today's call, please dial in and use the dial in details to the left of the slides and press star followed by one on your telephone keypad once you are connected. Star followed by one. We take our first question today from Matthew Webb at Investec. Matthew, please go ahead. Your line is open.

Hi, good morning everyone. Can I just start off by asking about Saint-Tropez and Child's Farm in the US? Clearly, very encouraging to see Saint-Tropez back into growth in the US and the Child's Farm opportunity with Amazon sounds very encouraging as well. Can you just remind us of what the economics of your relationship with Amazon is? Thank you very much for joining us.

Good morning, Matthew, and thanks for the question. You're absolutely right. We're really pleased with the progress we've seen in North America as we've transitioned our Santra Pay and now Child's Farm activation and distribution to Emerson. The good news is they have worked really quickly to get Santra Pay back to growth with, as we saw, Amazon doubling the growth rate. Thank you very much. And now, of course, with Child's Farm in Walmart, it was already on Amazon, with Child's Farm in Walmart, we have high hopes for long-term sustained growth, but it's really early days. Literally, we've been on shelf for weeks. So at the moment, we work with Emerson both as a highly effective logistics distribution company, a very effective customer management operation, but also in brand activation operations. Social Media Activation, Media Planning, PR but ensure that we also protect our gross margins and I can assure you that we are quite comfortable with the value creation that we have for ourselves as well as the opportunity for Emerson. So actually we're in a position where all they want to do and all we want to do is drive really accelerated growth for a sustained period to come.

Excellent, that's great to hear. Second question on Nigeria. I think that clearly the overall economic environment has improved and inflation is moderating, but I see it's still at quite a high rate. I just wonder what your pricing strategy is in Nigeria at the moment. Should we continue to expect fairly regular price increases? What sort of average price increase do you think that you might be looking to take in that market over the next 12 months, say?

Very good question. So obviously we are reassured by the more benign environment that we have experienced in terms of effects Thank you very much. Low single digit above inflation and obviously from the numbers that Jan took you through just now you can see that we were able to do that in FY26. We are absolutely looking carefully though at maintaining our volume performance as well as protecting our margin integrity and that is an important balance that we want to get right as we look at FY27. So we were already anniversarying, if you'll excuse the ugly word, a lot of pricing in the first half of last year. So we are being very judicious and forensic in our analysis of how we unlock future price so that we'd make sure that we don't price ourselves out of our competitive set. So we're very clear what we want to achieve in the long term and we have our hands very firmly on the tiller in the short term to ensure that the pricing we need to take we do, but that we don't price ourselves beyond the position of competitiveness versus some of the other players in the market.

Got it, thank you. And then for a final question, on Indonesia, sounds like the The sort of multi-stage relaunch or repositioning or refreshing, whatever we want to call it, of Cussons Baby is now pretty much done. I just wonder what's next? Are there plans for whether it's expanding that brand into adjacent categories, whether it's thinking about other possible brands for that market? What's the plan going to look like over the next year or so?

A great question Matthew because that is exactly the question that we have been working to answer for the last 18 to 24 months right and to some degree it's all of the above but I don't want you to think that's a lack of prioritization so there's no doubt job one is strengthening our core and indeed we have we have finished that phased restage and that was literally changing packaging on the very Significant number of SKUs that we have in the market that takes quite some time to get through, particularly given some of the long supply chain to East Indonesia and some of the more distant islands. And the good news is as that started hitting the shelves through the last 12 months, Thank you for joining us today. Thanks for joining us. and the launch of Slumbertime and Cuddle Calm, where we took Slumbertime from Child's Farm to put on as Cuddle Calm technology for Cussons Baby. That was an example of how we started to nudge up pricing as we moved up the tiers, if you like, from good to better. But we also know that we want to play with a second and possibly third brand in Indonesia. and we have activation already in place where original source is beginning to get expanded into more distribution points in the modern trade. And we're looking at another brand that we will have relaunched and repositioned by the end of FY27. So watch this space.

Excellent. Thanks, Jonathan. That's all from me.

The next question comes from Damian McNeill from Deutsche Bank. Damian, your line is open. Please go ahead.

Thank you. Morning, Jonathan. Morning, Jan. Jonathan, thank you for the reminder or heads up about Christmas shopping already. So always welcome in August. A couple for me, please. Jan, in your opening remarks, you talked about you want to bring a focus on improving returns. Can you provide a bit of a sense of how you look at returns? Are you talking about operating margins Thank you very much. How competitive is that category and what are the medium term outlooks for morning fresh water, dishwash? Will you continue to need to invest at that level to keep the brand growing? And then the last one is on Charles Farm in the US. Can you just give us some context to what the competitive backdrop for the brand looks like? Whether they're similar products or doing something like we would see in the UK or are there sort of brands like Towns Farm available out there? Jan, you want to first answer the first one and then I'll go to the second two.

Perfect. So I think to answer your question about whether I'm thinking Rocky or operating margins, actually both. So the business has been focused on prioritising investment and looking at The benefits across each of the regions and really it's just improving on that so whether it's those capital investments and really building some discipline around hurdle rates understanding the risk and reward in those areas or whether it's our marketing investments and where we're looking at new product development or product activation and really thinking about the returns and the risk and where we will make best use of our investments

Let me pick up on your other couple of questions first. Sorry, sorry, Damien. Go on, Damien.

No, I was just going to ask a follow-up for Dan. I just wondered, do we think in time PZs will provide a sort of a rookie target for the business?

Maybe in time. It's about early days. I will certainly be looking at it.

Yeah, okay. Thank you.

So David, just to reassure you, internet searches for Christmas gift sets start in September. So we're not that early mentioning it now in the beginning of August. But anyway, put that to one side. Right. Autodish. Wow. What a competitive category in Australia. The number one brand has a larger share in Australia than the number one brand in the UK. To give you an idea why I mentioned that there's a well-established and formidable competitor. but they don't have the morning fresh equity in manual that we have and nor do they necessarily have the depth of household penetration that we have with our very strong market share obviously morning fresh is broadly half the washing up liquid market so we absolutely are proving that we have a right to play and a right to win but we're also brutally realistic that it will take time and we have taken our time but we are glad that we have because we are now seeing the growth that we've reported this morning in terms of share performance and particularly when we get strong in store support behind it but we're in it for the long term it's not going to be a sprint but we absolutely see a value in us driving our exposure to the business and the biggest opportunity for us is going to be adding additional SKUs to the range we have quite a tight SKU today So over the last few months, we've been looking at what's the right pack size, what's the right number of capsules to have in the pack to win at a certain price point, and then growing the number of distribution points. In a sense, the good news is that we're not yet in full distribution in Australia, and therefore we have quite a lot of runway still to go as we start ticking off more of the major retailers, which still represent white space for us. and that's important because the reality is that in value terms over the last five years the auto dish category has been growing faster than the manual category so we still want to grow our manual share there's no reason that we shouldn't be striving to get a 60 or a 65 share but actually also driving exposure to auto dish and accepting it's going to be a long-term investment game but with acceptable gross margins I can reassure you of that we're totally in it for the long term and we see lots of upside still to go for so that's the answer on auto dish in Australia let me just touch on the baby and kids categories in the US so I was Thank you for joining us. It is not well developed in the underserved or overlooked niche of real sensitive need skin care but delivered in a fun and enjoyable colorful maybe even quirky way rather than overly clinical or you know very much the boring white packaging that you would predict in a kind of a pharmacy channel. So actually we think that the fun believably kind positioning, excuse the cheesy word there, but the fun believably kind positioning of Child's Farm has lots of potential in the U.S. And that's one of the reasons why the Walmart buyer has got behind it. Now, as I said, we're very sanguine about the challenge. It'll be a bit like auto dish in Australia. You know, we will have to earn our distribution. We will have to defend that distribution and then over time potentially expand it. but our job right now is to get out recruiting new parents in the US who are concerned about their kids having sensitive skin but also want to have some fun at bath time and that's really what we're setting about doing right now.

Okay, thank you, very clear.

Very good. As a reminder, if you'd like to ask a question on today's call, please use the dial-in details to the left of the slides and press star followed by one once you are connected. The next question comes from Sahil Shahan from Singer Capital Markets. Sahil, your line is open. Please go ahead. Thank you.

Morning, everybody.

I've got a few questions.

I'm going to sort of do these one by one, if that's okay. So, Jan, for you, very interesting slide on Nigerian liabilities. For a simpleton like me, could you just explain these intercompany liabilities and the drop from $140,000 Yes, okay.

So there are a number of different things within those dollar liabilities from intercompany recharges to the actual liabilities within the company from its cost of sales, quasi-equity loans and a number of different elements. And what we've been doing over the past Thank you very much. so roughly speaking now if there were a hundred and Iowa movement on that 30 million dollar liability that would give us a 1.5 million hit to our P&L so it's a number of different elements as well as kind of settling loans and all of those things to remove those liabilities thank you second question is

I think I read or heard it's up 10% year on year. I noticed UK growth was still soft and the main driver seems to be a couple of brands in there. So what gives you confidence that incremental spend is converting into UK growth next year rather than just defending market share?

You're absolutely right. We grew marketing spend double digit. We have invested at record levels for recent years. I think it is worth absolutely noting, not only was that trying to ensure that where we were confident of a return investment, that we were investing at sufficient levels to be competitive. And that varies by given categories and countries. We were also investing what we call incubator funds into planting seeds for future growth. Thank you very much. Thank you very much. Some of that was intentional and some of that was faster than anticipated requiring us to take some interventions. So where it was intentional is where we have pulled back on some smaller markets in Europe, as we have done by the way in Southeast Asia as well, where the business was either unprofitable or not very profitable. And equally, we have also pulled back on some of our smaller brands, which is the opposite of focusing on the lead markets and the top 10 brands. Obviously, that can lead to a conscious deprioritization in other places. and what that has meant that in some places we've seen either some trimmed distribution or we may have seen very strong shipments in year one where we got new distribution and we obviously didn't have that pipeline effect in year two but what it does mean is that we need to sharpen our pencil on some of our tail brands and make sure we're all over protecting that if they are going to decline and we're okay with that then we do that in a forecast and managed way or if we're not okay with it and there are some where we're not okay right guys what are we going to do to get motoring again and that's very much what we're working on but we don't want that work to distract from absolutely growing the core which is the biggest brands in our lead markets and that's why you know it's a quid pro quo of growth in four lead markets and top 10 brands that there will be some casualties we just need to make sure they're not unintended casualties and that's where we are as I say doing some work yeah can I just follow up on that

Jonathan if it's okay so is there any way you can disaggregate how the top 10 brands performed in the UK because I see that not half a percent growth in the UK and I'm just thinking that's a soft number and then you talk about market share again so I'm just trying to reconcile that.

So I'm very happy to do some disaggregation with you after the event fell when we get to catch up but essentially what we've got is very competitive markets where we are we are growing revenue but we also need to try and make sure we're maintaining healthy volumes as well and the reality is we're up against some very significant competitors in washing and bathing in the UK some of whom may have you know either more price-led strategies or more volume-led strategies so we're making sure that our plans are sufficient to win against them whilst delivering our financial ambitions but what really matters is are we growing our biggest brands in our biggest markets the answer is yes and we're very happy to follow up with you afterwards on maybe some of the moving parts.

Okay, so my next question is slightly related to this. Again, marketing spent has increased. I understand the rationale for that. There's been a bit of FX headwind in Asia Pacific as well, but when I look at margins both in UK, Europe and Americas and out in Asia Pacific, they're either flat or they've sort of come down. How should we be thinking about Mark, sorry, margins going forward. Is the UK likely to sort of drift even further as you invest more? And as far as the Asia Pacific's concerned, what's the guide and what's the thinking? Is there any chance of them inflecting in 2027?

So there are a few ways to tackle that one, Sahil, but if I take a step back, you know, one of the really important deliverables from last year that we set out to achieve was a significant reduction in our cost base. And as you see, we have reported an 8.5 million savings number. Most of that fell in the center. There were other savings elsewhere in the regions, but much of that was reinvested in other ways, sometimes in sharpening our capabilities as well. And what the savings in the center enabled us to do was to then spend the marketing investment in the regional P&Ls. That's why you see some of the pressure on the regional P&Ls, the operating margins that you're referring to, whereas at the group level, we were able to grow overall operating margins. There's a slight dynamic there going on between intentional and very rigorous savings discipline and cost discipline in the center, enabling us to get on the front foot in the market. That's one where I'd ask you to see the numbers in the aggregate rather than necessarily across the region by region P&Ls. Having said that, our absolute intention is that over time our regions are going to grow their margins because they are ultimately driving volume and improving their gross margin. If we get both of those right, we'll have enough oxygen in the P&L to invest in marketing and still flow to operating margin. And we'll always keep a careful eye on cost discipline in the centre as well.

Thank you for that.

I'll pick that up with you later as well.

The next question is around the write-downs in Charles Worthington and Fudge. Under forming categories by the sounds of it, are they now both sub-scale distractions that you'd consider exiting or divesting?

So I think, as you say, we've had to actually impair those brands because the growth isn't what we needed it to be. As Jonathan actually said, we need to now look Should we be investing in those brands or is it acceptable for them to be relatively flat where we focus on our top 10 brands or our top key brands in those markets? So obviously we didn't want to kind of see that performance, but yeah, we're looking at some of those areas. Got it.

Absolutely. We're right at the limit of time. If you've got one last quick one. Yeah, final one.

Sorry, just being a bit anal here. There's a significant working capital swing outflow. Just a bit of colour on that would be helpful.

So it's a combination of two things. One is actually the debt in Australia last year. We had some cash inflows on some financing of the debt. But a lot of it is just getting ahead on purchases because the impact of Iran, they're really trying to protect the inventory there. So that was the other main element of the 9 million outflow that you'll be referring to.

Very well said, Jan. So perhaps if I can wrap it up, we're just over the hour. I want to thank you all for joining today. I know we'll have some conversations with some of you in the coming days and we look forward to those. We will update you on progress as we see appropriate through the year. So we look forward to doing that. Meanwhile, I'm sure many of you are off on summer holiday. I wish you a lovely holiday. And as you dash to the airport, please pick up Child's Farm Suncare for you and the kids and help our revenues. So thank you very much.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.